Making Sense of MiCA Regulation’s Impact Across Crypto Markets

The initial contrast between the rules-based approach to cryptocurrency in the European Union and the enforcement-driven strategy in the United States was once thought to shape the global crypto industry’s trajectory.

Now that President Donald Trump is in office, having promised to make America the crypto capital of the world, the dynamic is different. However, the EU’s structured Markets in Crypto-Assets Regulation (MiCA) policy framework, aimed at harmonizing the fragmented regulatory landscape across the EU’s 27 member states, is already in place and continues to shape the operational realities of some of the world’s largest crypto companies in one of the world’s biggest economic regions.

MiCA’s applications, and its endemic speedbumps, could hold many lessons for an eventual U.S. regulatory environment.

Since MiCA was formally approved in mid-2023 and set to be implemented in phases through 2024 and 2025, market players have been rushing to comply with its provisions. Crypto exchanges, stablecoin issuers and wallet providers now face stringent licensing requirements, capital reserves mandates and clear consumer protection obligations.

While MiCA aims to streamline crypto operations, it poses challenges for existing virtual asset service providers (VASPs). All VASPs registered in the EU before 2025 must comply with MiCA requirements this year.

Predictions suggest that around 75% of these VASPs may struggle to meet the new standards. Factors such as company size, compliance costs and requirements contribute to this potential contraction. For example, many registered VASPs are small enterprises that may lack the resources to fulfill MiCA’s rigorous demands, including substantial share capital requirements and comprehensive compliance frameworks.

Meanwhile, well-capitalized players like Binance, Coinbase and Kraken are investing in compliance to solidify their positions in the European market.

Read also: Why CFOs Considering Stablecoins and Crypto Need a Cybersecurity Strategy

MiCA’s comprehensive approach covers participants in the crypto market, including asset issuers, trading platforms, exchanges and custodian wallet providers. The regulation permits banks, investment firms and other financial institutions to engage in crypto-market activities, provided they have authorization under the Markets in Financial Instruments Directive (MiFID) II to offer services.

In response to MiCA’s implementation, several major crypto exchanges have sought registration under the EU’s MiFID II to offer regulated derivatives. While the MiFID II framework was designed initially for the traditional financial services sector, and not crypto, it has become key for firms looking to offer regulated crypto derivatives, including options and futures.

Kraken, for instance, obtained registration through the acquisition of a Cypriot investment firm. Similarly, Gemini secured in-principle approval to offer crypto derivatives across the EU, while Coinbase disclosed plans to acquire a MiFID-licensed entity to expand its European derivatives offerings.

Europe’s proactive regulatory approach has also positioned it as a leader in crypto-friendly banking. A report indicated that up to 55 banks in Europe have integrated cryptocurrency-related services, surpassing other regions like Asia and North America. Countries such as Germany, the United Kingdom, Switzerland, Liechtenstein and Lithuania host pioneering banks in this space, offering services like secure custody, staking and asset tokenization.

The U.S. isn’t content to stay off the leaderboard list, however, with the Office of the Comptroller of the Currency having published Interpretive Letter 1183 last week to confirm that crypto-asset custody, certain stablecoin activities and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations.

The regulatory clarity provided by MiCA has encouraged traditional financial institutions to incorporate cryptocurrency services. Deutsche Börse’s Clearstream, for instance, plans to offer cryptocurrency custody and settlement services for institutional clients, focusing on bitcoin and ether. The move aligns with the broader trend among European financial institutions to engage in cryptocurrencies, particularly following MiCA’s introduction.

Still, in a sign of the thawing U.S. landscape, cryptocurrency firm Gemini, headed by billionaire twin brothers Cameron Winklevoss and Tyler Winklevoss, reportedly filed confidentially for an initial public offering (IPO). Kraken is also reportedly preparing to go public as soon as the first quarter of 2026. The plan for Kraken came after the company settled one case with the Securities and Exchange Commission and fought another until the SEC agreed to drop it.

Outside of the financial services and payments space, blockchain solutions are also making headway in streamlining and optimizing loyalty and rewards programs.

The PYMNTS Intelligence report “From Transaction to Transformation: Blockchain’s Loyalty Proposition” found that the loyalty market is projected to exceed $24 billion in revenue within the next five years, and brands are racing to tap into blockchain’s potential to create more flexible, appealing and profitable reward structures.

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